Gill’s departure leaves Ferguson isolated

David Gill’s surprise announcement on Tuesday, that he is to step down as chief executive of Manchester United after 10 years in the position, comes as a personal “blow” to manager Sir Alex Ferguson, leaving the 71-year-old Scot without a key Old Trafford ally. It is the most serious conclusion to draw from Gill’s resignation, which will take effect after the season has concluded in June.

Gill’s departure comes against the backdrop of the 55-year-old executive’s move into football politics. Gill, who has spent 16 years at Old Trafford first as chief finance officer and then ceo, recently joined the FA as vice chairman, and is applying to join UEFA’s executive committee. He will remain as a non-executive director of the club.

Meanwhile, 40-year-old Edward Woodward, very much the Glazer’s man, will take up his new role with a remit to further strengthen United’s commercialisation strategy. Woodward becomes ceo after a highly successful campaign to broaden United’s commercial reach over the past seven years, which has seen the club’s commercial revenues nearly triple to £117.6 million.

Woodward, formerly executive vice chairman at the club, led the team that globalised United’s commercial reach and diversified the portfolio of sponsors. Under Woodward’s executive leadership United’s aggressive commercialisation is highly unlikely to slow down.

But it is the impact on Sir Alex that is of primary interest to supporters, who have witnessed just three chief executives during Ferguson’s reign; Gill, Peter Kenyon and Martin Edwards. Indeed, Gill has become Ferguson’s close confidant in the past seven seasons, and a central link between the playing side of the club and the detached Glazer family in Florida.

“I have worked alongside the finest manager in the history of the game and been part of what I consider to be the best club in the best sport in the world,” said Gill in a statement released shortly after United informed the New York stock exchange on Tuesday.

“I have always been conscious of the fact that, as a member of staff, I was always just a temporary custodian of this marvellous institution. I am also of the view that all businesses need to refresh themselves with new management and ideas and after 10 years in charge I believe it is appropriate for someone new to pick up the baton. I’m delighted Ed has accepted the role.

“I am looking forward to continuing my involvement on the club board. And I hope to be able to make a contribution to the game on a wider national and European level.”

Without Gill, Ferguson’s political position at the club is challenged. After all, it was Woodward, not Gill, that was the primary driver of United’s IPO roadshow last summer, at one point promising potential investors that the Reds will not spend more than historical norms on transfers and wages. It was a promise that many people took at face value – an average net transfer budget of less than £20 million per season.

Recent analysis by blogger Andy Green forecasts that United’s surplus cash flow could reach more than £100 million in the coming years, putting Woodward on a collision course with Ferguson over budget, should the septuagenarian Scot remain at the club.

No wonder Ferguson admitted his dismay at Gill’s departure, with the man dubbed ‘Safe Hands’ no longer in the boardroom to facilitate his manager’s relationship with the American owners.

“I have been at United for over 26 years and for 23 of those years my boss has been one of only two men: Martin Edwards, who brought me to the club, and David Gill,” said Ferguson on Tuesday.

“Of course we have had a million arguments, but I have always enjoyed them because I know that David has two great qualities: he is straight and he always puts Manchester United first. No disagreement is ever personal with him. He always wants the best for United, whether it’s the players, the training ground or the staff.

“Him stepping down is a big loss to me but the fact that he is staying on the board encourages me that the reason for his departure is heartfelt, that he believes it is time for the club to move on. If I could have found a way of persuading him to stay I would love to have done that.”

In a decade as ceo, first under the Plc regime and latterly working for the Glazer family, Gill has generated significant controversy. Gill was integral to much of United’s first wave of commercialisation, provoking criticism from the media for United’s marketing approach, and from fans for the evolving nature of the Old Trafford matchday experience.

Gill also led the board’s strategy to increase ticket prices ahead of the Glazer’s leveraged buyout, justifying rises under the mantra of retaining the club’s ability to fight off a hostile takeover. It did little good.

Most controversially, Gill initially rejected the family’s approach for full control of the club in 2005, infamously stating that “debt is the road to ruin” and that the Glazer family’s business model was “overly aggressive”. Gill’s hostility soon morphed into support for the Glazer regime once the takeover was completed, although there was little material difference in either debt leverage or business approach.

It takes not a cynic to suggest that Gill’s salary, which has more than doubled since 2005, has bought significant loyalty to the new owners, who have sought to retain the executive’s involvement in a non-executive capacity.

“David has played a significant role in the success of Manchester United in his 10 years as CEO and he can take great satisfaction at all that has been achieved on his watch, both on and off the field,” said Joel Glazer, co-chairman in a rare statement from the family.

“I am very pleased he has agreed to remain on the board, so that his experience and counsel are not lost to us. I hope that the decision he has made will be to the benefit of the game in Europe as a whole, as he seeks election to Uefa’s executive committee.”

Meanwhile, Woodward called his appointment a “great honour,” adding that he is “humbled” to work with Ferguson. Yet, the obsequious words can do little to mask the new chief executive’s remit, which is to drive home the club’s profit goals, generating ever greater margins as the Glazer family seeks to extract equity from the business.

It is an objective that, as one reporter put it on Wednesday, completes the ‘Glazerfication’ of Old Trafford; an entity that now exists primarily to extract profit for its owners, and to be a football team as a by-product.

This process was once anathema to Ferguson, the socialist ship worker’s son, now working for the game’s most commercially geared organisation and under the leadership of the Glazer’s prodigy.

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Comments

Thanks for this.
The penultimate paragraph interests me. If United is now to truly become a business primarily meant for the generation of profits for the owners, will the Glazers not, at least once Ferguson is gone, learn from what is happening at The Emirates?
Arsenal have won nothing for 9 years now and no trophy seems to be on the horizon- it doesn’t even seem as though they want to win trophies – and yet they are making fine profits thanks to commercial income and their ticket prices. Surely, United could do the same. Isn’t it a concern that this will be the path the Glazers will follow?

Yeah I trust Ferguson that even if he would be pushed by a budget he’ll still be able to build a successful team, finding the vidic-and-evra-like bargains.
But I really am fearful of what happens when he leaves – it’s a worry even if we have a Chelsea-esque transfer budget let alone if the Glazers go all Kroenke on us… I actually took this concern up with Ed on twitter a couple of times but he said he didn’t think that would happen, but that paragraph near the end seems to allude to it.

grrr I’m not certain about Moyes at all… This season is the first time Everton actually had a decent start to the season and didn’t take 7-8 weeks just to get started…
I have to say though I don’t buy into the whole Pep/ Mourinho thing. I don’t think the Glazers will want to pay the salary either of them will ask for, and to be honest I’m not really sure I want either of them (though for different reasons).

A concern of mine as well. I can imagine the Glazers implementing—through Woodward—a policy of treading water while waiting for FFP to prove effective in restricting City and Cheatski in their efforts to stockpile talent, which should also act to bring salaries down. Unfortunately, I don’t believe for one minute that FFP will prove effective.

On a related note: I notice that Liverpool seem to have a second sponsor logo on the back of their shirts when they play in the Europa League. I’ve seen the same thing on sides from lower divisions in the UK, but not in the Premiership. I take it that the BPL has specific rules against multiple shirt sponsors. Heaven help us if they ever lift that rule. The United kit would be so covered in sponsor decals, the players would look like NASCAR drivers.

Don’t think the Glazers would be happy with an Arsenal level of success. We wouldn’t be able to charge so much for sponsorship if we weren’t consistently successful. How many 100s of millions of followers would we lose if we didn’t win a trophy for 7 years? To think they’d try and save a couple of million a year and settle for an average manager is ridiculous. If they go with Moyes, it won’t be because of his wages. Player wages won’t be going down either. Clubs might have a % target, but the rise in TV revenues should (at least) maintain them.

Why do you think they care what level of success the club enjoys?
Liverpool haven’t won the league for 23 years now and their brand is one of the strongest in world football, their following may have suffered a bit but they still have many millions of fans worldwide. I think football fans overrate the influence of the quality of the side over the potential commercial revenue to be made from it.

I would agree that the Glazers would be happy with any level of success so long as they are making money. They are typical american business owners; extremely private and guarded in everything they do.

It is highly apparent that they do not care one iota for how United supporters feel so long as they keep coming back for more.

In the states the Glazers own the Tampa Bay Buccaneers which is basically a mediocre NFL team with one super bowl win (in 2002). Their cash cow is now Manchester United, and they aren’t looking to let go any time soon, imo.

I also agree that I’m worried about how United will do after Fergie retires. I cannot think of anyone else to take his place.

marlon said:
Don’t think the Glazers would be happy with an Arsenal level of success. We wouldn’t be able to charge so much for sponsorship if we weren’t consistently successful. How many 100s of millions of followers would we lose if we didn’t win a trophy for 7 years?…
We’ll be OK until Fergie goes anyway.

I do not think that adopting an Arsenal-like financial prudence would necessarily end up leading to a seven year dry spell of trophies; our players and current manager are too good for that. It’s more like this: under the Glazers, Sir Alex gets to buy Baines from Everton next summer and perhaps one or two no-name youngsters, but ownership that saw United as a football club first and foremost would see just how close this side is to being a real Treble challenger, and Sir Alex would get to buy Baines as well as invest the new TV deal money into a left-footed Left Wing and a top quality CM.
As things stand, next season, a fiscally responsible United would have a great keeper, a truly solid back four with depth, a quartet of quality striking options, and Zaha and Nani to hopefully take up some of the load that Rooney and Welbeck have been carrying on the wings. Only one thing would prevent United from being a real threat… How did Yeats put it? Oh yeah, “things fall apart, the centre cannot hold”. Carrick will be one year older and slower, while Cleverley, Anderson, the shadows of Giggs and Scholes, plus the hope of Fletcher will not be able to withstand the pressure that every side will know to apply in the midfield. Powell, Tunnicliffe, and Lingard will have to come good very quickly.
This season, United have taken “winning ugly” to an entirely new level; I doubt very much that they will get away with it for a second season. City and Cheatski will not stand still in the summer, but for all intents and purposes United will. Can fighting to finish in the top four be far behind?

The Glazernomic plan is predicated on winning – not just “competing” like TheArse.

So, I’d imagine that with the massive increase in commercial revenues there will be enough do$h to cover the costs of wages/transfers because if the team gets slowly asset-stripped then the scenario that’s occurring at TheArse is entirely likely to occur at OT (or whatever it will be called when they decide to sell the naming rights to Apple or some other multi-nationals mega-giant for 100,000,000 annually.)

In fact, it seems to me that the “lessons” of ArsenalFC and, in a very different way, the possible impact of FFP on ManShitty, PSG, and CSKALondon will probably mean that wages will continue to hover around 50% of turnover and the importation of guys from Mexico, Argentina, Serbia, Brazil – anywhere but M61 – will no doubt continue.

The other day, Fergy mentioned that in the last two decades MUFC have “earned” well over 100 million quid from the sale of players from the academy. So, the practice of hoovering up talented kids from Argentina, Brazil, Serbia, and Mexico will no doubt contine since the “youth system” seems to be largely self-financing.

I think that the big implication of David GIll’s departure will occur when SAF decides to retire – he won’t have as many allies on the board but will still have a very significant voice in that decision in 2031 or 2032 when he turns ninety.

Commenter said:
Why do you think they care what level of success the club enjoys?
Liverpool haven’t won the league for 23 years now and their brand is one of the strongest in world football, their following may have suffered a bit but they still have many millions of fans worldwide. I think football fans overrate the influence of the quality of the side over the potential commercial revenue to be made from it.

You make some interesting points, but I think the truth lies somewhere in the middle. While Liverpool have not won the league for many years, it has won things in the meantime—including the Champions League. Arsenal, on the other hand, have only had to endure a seven year drought to lose much of their world-wide support. Could Liverpool’s decade and a half of dominance—as far back in the past as it is—have given it more staying power in the hearts and minds of foreign followers than the sporadic successes of Arsenal? I think it may have.
Two seasons ago, I was a Portland Timbers season ticket holder. I usually wore a United top to the matches, as did about half of those wearing non-Timbers football tops. There was one father and son whose seats were in front of mine who routinely wore Cheatski tops, but they were the only ones I ever saw. Once Cheatski had clinched the title, however, I was shocked to see how many brand new, Adidas/Samsung Cheatski tops showed up at the next Timbers match. I would imagine that a similar scene occurred last season, only with City tops—and I have never seen a City top while living in the U.S..
It’s all about winning, but sides that have dominated for years and years develop an aura, a cachet, and a devoted following that sides like City cannot just buy, they will have to earn it.

That’s what I really fear, actually. Because I don’t think Arsenal’s plan once The Emirates was opened was to go 6 more years without winning anything and just deciding that finishing 4th and getting to the knock-out stages is enough. I think that that just happened, and once it had happened they realised that by not making the investments required to really compete at the top level they could find an equilibrium between spending just the right amount of money to seal lucrative enough deals, and compete at just the right level so the fans keep paying up.
I’m not worried that that could happen under Ferguson, and I really loved the point in his interview with Dan Walker for Football Focus a few weeks back, he was asked what would happen if United went 8 years without a trophy under him, would he feel under pressure, and he just dismissed that notion completely and said “That would not happen”.
But once he’s gone, if the next manager isn’t as competitive as him (and he definitely won’t be as secure in his position as Fergie), that might just “happen” to us, without any real intention at least at first.

Cmmercial success in football is very much linked to winning, or the preception of geing able to win it. You need to be at least a contender
Echoing someone else’s comments, all of a sudden I see many more Man City shirts in my part of the world.,..without winning that would have never have happened….
Glazers smart enough to see that. In regards to the debt being a cash drain, at andersred estimation of a 113m ebitda that makes the debt level at a fairly agressive but manageable 3x ebitda so that shouldnt be a concern
Glazers will NEVER love United. But they are, from what I can gather, good businessmen. And as good businessman they know that winning, or being close to winning, is jecessary to maximize profits. It’s like GE’s Jack Welch once said, if GE wasnt no 1 or 2 in the market, they’d exit. I think its similar logic here…
Actually the REAL worry is if we ever get into a strict salary cap system a la NFL, then they wont care as much. Thanfully FFP is still based on revenues

That’s not entirely correct, because although you might (if someone has any actual data I’d be thrilled to see them) have a slightly better chance of securing high-paying commercial deals if you’re winning, I think it’s more about your reputation as someone pointed out earlier.

Even if there is a strong link between commercial and on-the-pitch success, there is another factor here and that is the investment required to keep on winning. If the difference between the potential commercial revenue if the club is “successful” on the pitch and the revenue when it simply gains 4th spot and gets into the knockout phase in the Champions League, is lower than the difference in the required investment to keep winning and the required investment to secure 4th spot, then even assuming that winning things will increase commercial revenue, it is not economically profitable to make the investment required to keep winning.

Commenter said:
That’s not entirely correct, because although you might (if someone has any actual data I’d be thrilled to see them) have a slightly better chance of securing high-paying commercial deals if you’re winning, I think it’s more about your reputation as someone pointed out earlier.
Even if there is a strong link between commercial and on-the-pitch success, there is another factor here and that is the investment required to keep on winning. If the difference between the potential commercial revenue if the club is “successful” on the pitch and the revenue when it simply gains 4th spot and gets into the knockout phase in the Champions League, is lower than the difference in the required investment to keep winning and the required investment to secure 4th spot, then even assuming that winning things will increase commercial revenue, it is not economically profitable to make the investment required to keep winning.

Reputation keeps the golden glow for a while. But after you dont win a while it starts tapering off
Add to that that reputation is formed BY winning…
Financailly speaking, its no coincidence that the biggest revenue generating clubs are Man Utd, Real and Barca. These are the consistent winners.
There are 3 main revenue streams for a football club: matchday revenue, TV deals and commercial (merchandising and sponsors)
TV, in case of EPL, is shared. But matchday and commercial is directly linked to how successful you are, although matchday is also linked to siz of your stadium (which I would argue is also direct result of winning)
The more successful, the more matches (as you progress further in UCL and cups), and the more sponsors that are willing to pay more.
While I dont have data on hand, which clubs consistently sells out their stadium? I remember reading somewhere that Arsenal doesnt…
Liverpool is still a great brand, but even commercially I dont think they are anywhere near United, despite winning UCLs etc…and I would argue that Liverpool is an exception rather than the rule, perhaps due to their utter dominance in the 80s
if you’re the winner, you can charge more from your sponsors. Sponsors love winners, period.
Add to the fact that this is a vicious circle: if you dont win you will have more difficulty getting the best players which in turn decreases your ability and reputation which makes it harder to win etc. after all, we’re the direct beneficiary of this – RVP left Arsenal because they couldnt win trophies
As for your point on investment – this is the beauty of football. You simply dont know. Wouldnt you agree that the 24m spent on RVP had had much more impact than the 28m spent on Podolski and Giroud, or the 32m for Oscar, or the 17m for Ashley Young? Or to quote the oft repeated mantra in the media – Michu only cost 2m!

Anantax said:
As for your point on investment – this is the beauty of football. You simply dont know. Wouldnt you agree that the 24m spent on RVP had had much more impact than the 28m spent on Podolski and Giroud, or the 32m for Oscar, or the 17m for Ashley Young? Or to quote the oft repeated mantra in the media – Michu only cost 2m!

That kinda comes down to the scouts. There are plenty of examples you can come up with, when Newcastle signed Alan Shearer for £15million, we got Ole Gunnar Solskjaer for £1.5million the very same Summer, and I think we all know who got the better deal then!